Just seen Le Figaro's reaction (as also mentioned in the Cassandra column of this magazine ("Reform is painful—and the alternative worse"). Other French news sites have expressssed similar responses. I suspect you're wrong, and that the French economy is more robust than outward appearance. That's not to say that it doesn't have problems. Are you sure you're not anti-french?

‘Thanks for the balanced approach and the obviously unfaked familiarity with French society’ [Dominique II]
'TE's correspondents in France (who have positively basked in the media's sunlights ever since this article) have clarified the issue of TE's citizenship: "The Economist is an European newspaper". / Knowing TE's deep mistrust of anything Euro, that's a howler...’ [Dominique II]
Face it, Dominique II, 'The Economist' emerges in this rather splendidly... particularly compared with the fine flower of French political and journalistic life. If only your compatriots would show the same dignified restraint as you do.
Seriously, Dominique, have you actually read all or indeed any of the ‘Special Report’? There’s Jean Guy Giraud over there, laying down his usual smokescreen but no Dominique II. Admit it, you haven’t. Aren’t you being a bit of a fraud? You accuse ‘The Economist’ and its readers with treating France unfairly but you yourself produce no sign of having read the 14-page report.
Another of your splendid compatriots accuses the Special Report’s writer of hiding behind a cloak of anonymity… despite the sub-heading, ‘France is slowly heading towards a crisis, says John Peet. Can the country be reformed before it is too late?’ [page 3]

Anyway, no matter what France do, after France "The Economist" will point out after GERMANY, something they, like "Bloomberg" and other magazines in the U.S and the U.K. have done before.

No matter if Germany has done a great work under "Agenda 2010" and its economy is one of the most competitive in the World, with a large surplus compared to the American and British deficits.

After France, they will point out to Germany´s banks, health care spending and demographic decline, a last try to break the €uro...but the €uro is here to stay and in a decade there will be at least 5 more member states than now.

it would have been astonishing that you didn't praise TE, since it's your bible for anything on France
but you won't find a analyse de fond" on your favorite medias, just the same slogans for ages, France statism, France social charges, unike in your Holly free-markets country, where the results aren't better than in France though
We do not need you for getting a image of the France society and Economy, there are good analysts in France, but unfortunately they aren't of your choice

‘it would have been astonishing that you didn't praise TE, since it's your bible for anything on France’ [Marie-Clear]

The difference between you and me, darling, is that I read ‘The Economist’. And you prefer to knock it. Have you read the ‘Special Report’ on France, yes or no? Or do you feel that reading the articles cramps your style. {…te fait perdre tes moyens]?

I’m sorry to have to say this, Marie-Clear, but you force my hand: the French are rather unwilling to learn the facts of life. Virgins:

‘The French system also tends to produce political leaders who are all of a type. Few have any business or international experience or speak any foreign languages. Most are graduates of one of the grandes écoles (Mr Sarkozy was an exception, but with Mr Hollande the country has resumed its habit of choosingénarques as presidents). Most ministers, even on the lower pay set by Mr Hollande, work in grand town houses dotted around central Paris and are ferried about in cars (you seldom see a minister on the metro). All this breeds a detachment from reality that strengthens an innate belief in statism, a mistrust of free markets and a hostility to the world of finance and commerce, all deeply entrenched in the French body politic.’

‘Similarly, economics textbooks in schools and universities generally take a more hostile view of free markets and a more favourable one of state intervention than those in other countries. Opinion polls show that the French are less keen on Anglo-American free markets than people in other countries. Asked if capitalism is functioning reasonably well and should be preserved, only 15% of respondents in France say yes, compared with 45% in Britain, 55% in America and 65% in supposedly communist China.’

If you allow me I would like to make several educated remarks concerning the article that you cited above in your comment. These remarks have been well thought out and it is not without a long experience in having lived in France that I allow myself this liberty to comment on above cited article.

I will take several points that the Economist brings up and based on my experience both personal and from a business standpoint, try to respond as intellectually as possible to them at the end of each point brought up by The Economist.My response will be found at the end of each point and will be identifiable by the utilization of capital letter.

In France, save for the occasional periods of cohabitation, the president is all-powerful, able to pick and choose prime ministers and members of the government at will and largely unchallenged by any parliamentary opposition. DUH HELLO !

The French system also tends to produce political leaders who are all of a type. - DUH HELLO !

Few have any business or international experience or speak any foreign languages. DUH HELLO !

Most are graduates of one of the grandes écoles (Mr Sarkozy was an exception, but with Mr Hollande the country has resumed its habit of choosing énarques as presidents). DUH HELLO !

Most ministers, even on the lower pay set by Mr Hollande, work in grand town houses dotted around central Paris and are ferried about in cars (you seldom see a minister on the metro). DUH HELLO !

All this breeds a detachment from reality that strengthens an innate belief in statism, a mistrust of free markets and a hostility to the world of finance and commerce, all deeply entrenched in the French body politic. DUH HELLO !

Similarly, economics textbooks in schools and universities generally take a more hostile view of free markets and a more favourable one of state intervention than those in other countries. DUH HELLO !

Similarly, economics textbooks in schools and universities generally take a more hostile view of free markets and a more favourable one of state intervention than those in other countries. DUH HELLO !

Opinion polls show that the French are less keen on Anglo-American free markets than people in other countries. DUH HELLO !

Asked if capitalism is functioning reasonably well and should be preserved, only 15% of respondents in France say yes, compared with 45% in Britain, 55% in America and 65% in supposedly communist China (see chart 4). DUH HELLO !

This is not a matter of left and right. Mr Hollande once said he did not like the rich, and in the election campaign declared that the chief enemy of France was finance. DUH HELLO !

So far, so expected; but he was echoing not only Mitterrand (who denounced “all the power of money”) but also de Gaulle, who declared that “my only enemy, and that of France, has never ceased to be money,” and Edouard Balladur, a former Gaullist prime minister who once defined civilisation as the struggle against the market. DUH HELLO !

No French political leader would dare to emulate Peter Mandelson, a senior British Labour politician, who said in 1998 that he was “intensely relaxed about people getting filthy rich”. DUH HELLO !

And in general to the gist of this article I would just like to comment... DUH HELLO !

"the president is all-powerful, able to pick and choose prime ministers and members of the government at will and largely unchallenged by any parliamentary opposition."

it's in concertation ith his MP, the president can't remove a government, if the PM doesn't resign himself, besides when some ministers are canged, they are picked from the same party of PM (because it could be during a "cohabitation"

"Presidential authority also benefits from France’s relatively weak and often fawning media."

BS, Sarkozy knows all about the "weak" medias, like Hollande today too

"The French system also tends to produce political leaders who are all of a type"

LMAO, some dwarfs, some are ravens, some are bulls some are guenons...

"All this breeds a detachment from reality that strengthens an innate belief in statism,"

of course they don't rule Hallliburton like most of the technocrats of the Bush Family regimes

"a mistrust of free markets and a hostility to the world of finance and commerce,"

check our enterprises in the CAC 40, all are making state bicyclettes DUH !

sorry but our Finances have the international reconnaissance, we didn't learn how to run a bank in the 1800 like the Americans, our finances schools rank in the world top ten

"all deeply entrenched in the French body politic."

uh sorry, they don't run for the internationale of the Evangelists

"Similarly, economics textbooks in schools and universities generally take a more hostile view of free markets and a more favourable one of state intervention than those in other countries"

Similarly, you haven't open any economics books in your life, and the lesser, french ones, our economists are hired in world wide universities, in UK, in the US too

"Most ministers, even on the lower pay set by Mr Hollande, work in grand town houses dotted around central Paris and are ferried about in cars (you seldom see a minister on the metro)."

LMAO, Stalin or Putin didn't/doesn't travel on Metro too

"Opinion polls show that the French are less keen on Anglo-American free markets than people in other countries."

shoe me where? why would the French prefer the American way for ruling the french businesses? Sarkozy tried, the results? more DEBT !!!

"Asked if capitalism is functioning reasonably well and should be preserved, only 15% of respondents in France say yes, compared with 45% in Britain, 55% in America and 65% in supposedly communist China"

and Debts in the US and UK skyrocketed, banks bankrupted... LMAO

"This is not a matter of left and right. Mr Hollande once said he did not like the rich, and in the election campaign declared that the chief enemy of France was finance."

Romney said worst things, that the Chineses were all villans, the Brits... drunkers, the Americans? assisted !

"So far, so expected; but he was echoing not only Mitterrand (who denounced “all the power of money”) but also de Gaulle, who declared that “my only enemy, and that of France, has never ceased to be money,” and Edouard Balladur, a former Gaullist prime minister who once defined civilisation as the struggle against the market."

I doubt that Mitterrand pronounced such words, he was very careful, he wouldn't have undermined his political future with such conneries

De Gaulle rather said "la politique de la France ne se fait pas à la corbeille" meaning that that's not the banksters that would dctate the rules of his policy, indeed, he put the bankters in cage, packed all the thin-air-made dollars on a fregate, to NewYork for exanging them with gold bars

Balladur could have said such a connerie too, he was from a old bankster family (from Istanbul)

"No French political leader would dare to emulate Peter Mandelson, a senior British Labour politician, who said in 1998 that he was “intensely relaxed about people getting filthy rich”.

LMAO, didn't he have to resign from his position, due to incompatibility with inner intelligence from his position in the EU commission?

"The scandals that brought Peter Mandelson down twice before
Peter Mandelson's two previous spells in the Cabinet both ended with him reluctantly penning a resignation letter to Tony Blair and leaving Downing Street under a dark cloud.

He was undone on that occasion by the revelation that he had bought a fashionable home in Notting Hill, with the help of an interest-free £373,000 loan from his millionaire ministerial colleague Geoffrey Robinson.

When Mr Mandelson filled in a Britannia Building Society mortgage form to buy the house in 1996 he had failed to mention the loan. Nor did it appear on his entry in the Commons Register of Interests"

I have followed, in both Le Monde and The Economist, the debate that has flourished since Friday. For background, I was raised in the USA, worked for 16 years in Paris and have been based in London for the last 20 or so. I love and criticise all three countries in equal measure.

There seem to be two types of response to The Economist's special report: (1) factual and analytical (whether for or against) and (2) emotional: e.g. (a) TE speaks for the UK government or the Tory party and is French-bashing; and/or (b) how dare TE criticise La France, when the UK has such problems of its own?! That a government minister can in all seriousness compare TE with Charlie Hebdo is frankly amazing.

The issues have been largely explored, so I wish only to add some observations from my personal experience in France that suggest that some change in thinking may be merited.

• VAT was incrementally increased a number of times since 1970, often hailed as a “temporary measure”, in order to “combler le trou dans le sécurité sociale”. The Sécu still has financial problems and the government’s budget has been in deficit ever since 1974.

• In the 1970s and 80s, if you were made redundant (“licenciement pour raisons économiques”), the state paid you 90% of your former salary. I met someone not more than 10 years ago who was still able to benefit from this legislation.

• A friend’s daughter, in her 30s, has been working for 15 years for the same company, but is officially “temporary” and so cannot apply for a mortgage, as her job is “précaire”. She is far from alone in this position.

• In 2010 student (and other) protests against proposed changes to labour laws seemed designed to ensure that “la couverture sociale” would stay firmly on their side of the bed, to the detriment of those less protected or less likely to get a job (I’m thinking in particular of French citizens whose origins are in the former French colonies). Where are fraternité and egalité?

• Another friend of mine does not like taking orders from other people and was able to be categorised as having mental health problems, thereby receiving an incapacity benefit for 35 years, before taking retirement.

• When I meet French people living in London and ask why, the response invariably has to do with the inflexibility of the job market in France or the difficulties there in starting one’s own business.

I admire many things about France and, like many contributors here, I sincerely hope that the French will find their own solution to the problems the nation faces. But also that it will face those problems.

(So there is no misunderstanding, I wish the same for the USA and the UK!)

Thanks for the balanced approach and the obviously unfaked familiarity with French society.

The short-term job being renewed over decades, and its consequences, is typical of the great many real French problems that TE won't even look at, because they don't fit with its obsession about French purported statism.

The continued renewal of short-term jobs is an easy opt-out for companies. I have known no other system for all of my career, and so-called permanent jobs are a rarity. However, the social safety net systems are still geared to permanent jobs, and as a result employees in the current model are back in Victorian times.

How is that conducive to better employment and productivity? When 80% of the workforce spends 50% of its working time planning for its next job, that's an astonishing waste of time. (especially in France where finding a new job is much easier from a work position than from a jobless status, which is crazy, and entirely a corporate, not state, issue).

How would the necessary adjustment to banking and leasing practices, allowing your friend to rent or buy decent lodging, be a fiscal liability or an insult to TE principles? Yet it never ever mentions this issue, which any young worker in France will mention within minutes of being interviewed.

I'd love TE to be critical across the board and provide really useful advice, rather than keeping to its tired anti-statist tirades, which only address part of the problems.

Dominique,
I have to agree with Plazidus, your comments make it sound like you still haven't read the "in-depth" 14 page article.
To answer some of the questions you ask above, try this for example:

"France also has a chronic unemployment problem. Only once in the past 20 years has the rate fallen below 8%; it is now over 10% and rising. Because of high social charges, burdensome labour-market regulation and the difficulty and cost of making workers redundant, big and small companies alike have been reluctant to create new jobs. The French like to boast of their high productivity, but this reflects not just efficiency but also an unwillingness to hire. In many French factories workers are notably thin on the ground. The Paris metro has begun to operate driverless trains, ostensibly to improve security and reliability but presumably also to save on costly and strike-prone labour. Even French vineyards are investing in expensive machines to replace human grape-pickers."

Too much protection of people in "permanent" jobs (a crazy notion in such a fast changing world) is the main reason so many other people are kept on temporary contracts and until this changes, don't expect too many changes in the way businesses handle this issue. It's a question of survival.

"In the 1970s and 80s, if you were made redundant (“licenciement pour raisons économiques”), the state paid you 90% of your former salary. I met someone not more than 10 years ago who was still able to benefit from this legislation."

It's not the state that delivers such insurance benefits, but the ASSEDIC, which is a insurance whose financing come frome workers and enterprises, whereas Labor and patronal unions agreed on such payements

" but is officially “temporary” and so cannot apply for a mortgage, as her job is “précaire”. She is far from alone in this position"

yes the french banks have draconian rules for allowing credits on mortgages, even it's getting worst today, a married couple must justify of a monthly net revenue of €4000, plus granting a "apport of €50 000

that's why you'll never see a housing bubble in France like in the US and elsewhere

uh, explain this 2010 student protest on labour laws, to me it was during Chirac mendate with de Villepin as MP

"Another friend of mine does not like taking orders from other people and was able to be categorised as having mental health problems, thereby receiving an incapacity benefit for 35 years, before taking retirement."

I'd rather say that your friend is "clever", his/her case is far from being a generality

"When I meet French people living in London and ask why, the response invariably has to do with the inflexibility of the job market in France or the difficulties there in starting one’s own business"

I'd like to know if all the French in London created a business? a bet, the large majority is employed, but I agree it can be easier to find a "first job" in England, that's why they moved there.

though if one has the will, and some good knowledge of what he wants to achieve in France, there's not such insurmontable difficulties

" Because of high social charges, burdensome labour-market regulation and the difficulty and cost of making workers redundant, big and small companies alike have been reluctant to create new jobs."

that's remnent critic from the neo-liberalists, but they don't question the roots of the competiveness problem, it's the euro made for the german exportation machine, too high rated for our products that are sold on dollars markets ( whereas expensive german cars and tool-machines are sold on a cost basis denominated in euros), than they would if they were sold on DM basis costs

"The Paris metro has begun to operate driverless trains, ostensibly to improve security and reliability but presumably also to save on costly and strike-prone labour. Even French vineyards are investing in expensive machines to replace human grape-pickers."

why don't you that as a progress ala neo-liberal way?, that is what we remnently hear from across the Rehein, and from across the Channel, reduce your labor costs, rationalise and modernise your production... A bet, anything the french do, will never please you !

"Too much protection of people in "permanent" jobs (a crazy notion in such a fast changing world) is the main reason so many other people are kept on temporary contracts and until this changes, don't expect too many changes in the way businesses handle this issue."

one more llose argument, it should plese you that most of the new labor contracts are only temporary contracts !

"It's a question of survival"

LMAO, try to survive in your paradise first, in France we can still cultivate our gardens

Marie Clair,
I have no idea what you do for a living but I have actually run businesses in France and believe me, between unit labour costs and all the issues around hiring and firing, from a micro economic perspective, replacing workers with machines makes far more sense in France than in other countries with similar levels of economic development. This was verified year after year in benchmarking studies done in one of the multinational groups I have worked for.

So, we can collectively remain in a state of denial about these issues or maybe try to do something about it.
By the way, I also have three adult kids who are potentially facing all the issues mentioned regarding the precarious jobs young people are presently offered and feel for everyone concerned so no, it doesn't please me that most new labor contracts are temporary.

However I do think that the main reason we have arrived in this crazy situation and a similarly crazy situation trying to rent a flat in any of the large French cities, is that the law offers so much protection to those who are "in", that employers, landlords etc. have to be very, very cautious about who they let in -> too much protection kills the protection...

To illustrate this my son, just back from a year long internship in Canada, couldn't get over how much simpler it was to rent a flat in Montreal compared to Paris. In Montreal, he simply presented himself at an address and after a few questions about what he was doing, he was able to rent immediately. When he got back to Paris where he is finishing his studies, he and his 3 fellow "co-locataires" had to produce a huge list of documents including my tax returns for the previous 3 years, proof I still had a job and a guarantee from each of the 4 parents involved making us liable to pay up to 96k€ if our kids defaulted on rent payments. Sure, this landlord (landlady as it happens...:-)) may have been a bit worse than others in her demands but overall, if we have reached such a crazy situation it's because based on present law, there is almost nothing she could do for months and months, if not years, should her tenants fail to pay.

But of course, France is indeed a paradise which is why well educated kids like my son can't wait to finish their studies to that they can move to more welcoming environments like Canada.

That by the way, is from the heart. The French system has become so sclererotic and unattractive to the young, that unless we change very quickly, we will lose more and more of the people we should most want to keep, the well educated, ambitious people who make things happen.

Before calling me dishonest, consider this. I do NOT question the report's contents or analysis, even if, on reading it, I'll probably find lots of angles to pick at it. And lots of omissions in the listing of France's woes and shortcomings.

My interventions on this forum stem from the ARTICLE above it, which is but the last in a long series which has repeatedly called for investment and credit flight from France - not an innocent action. The only time TE more or less faltered was when Hollande, contrary to TE's confident prediction, took aboard the Gallois report; TE was obviously taken aback and mumbled some kind of very reluctant praise. I can't help seeing the article as a hasty reaffirmation of TE's hostile stance, at the cost of being gratuitously provocative - the report, by itself, would have carried much more weight than by being associated with an ideological broadside and a rather childish cover page (Charlie Hebdo must have been hurt by Montebourg's quip).

On another plane, I assume you are French. Well I do not know anyone in my vicinity, branch or family who holds a "permanent" job. I never held one myself - for 40 years. Maybe you're luckier than I am. But when I read that most French young people want to get a civil servant job, I can't help to think stereotypes take a long time to die.

Now I have to pick up my beret and baguette to go and hit on a comely Demoiselle des Postes with a permanent job and a ludicrous pension scheme...

Dominique,
First of all I am a French national but was not born French. However after almost 40 years in my country of adoption and having lived in many different places from Corsica to the Nord Pas de Calais through Paris, Burgandy, Lorraine and Alsace, I think I know the place pretty well.

Furthermore, I have already agreed with you concerning what I perceive as a rather irritating anti-French bias in TE articles.

However, maybe because I also have direct experience of a quite a few other countries, I can see an awful lot that needs changing in France today, most of all a public sector that is slowly squeezing the life out of the private sector through excessive taxation and regulation.

Also, even if it is true that in the private sector, "permanent" jobs are becoming a rarity, the recent row about the closure of the Peugeot factory at Aulnay sur Bois showed there is still a very widepread belief that the "permanent" job, which was a reality during the "30 glorieuses" should still be the norm and labor legislation in France is still hugely influenced by this idea.

All of this is far too defensive for my liking, just like the Maginot line which failed to stop the Wehrmacht in 1940.

Like the thinking behind the Maginot line, we are trying to fight today's battles with tools that date from the 1950's and 1960's and they are showing very serious signs of wear.

So, when you do eventually get around to reading the in-depth article, if you can get beyond a knee-jerk reaction to all things coming from a liberal journal like TE, you might actually find that most of it makes a lot of sense.

Most of all it encourages the French to have more belief in themselves, the belief necessary to be a bit more offensive and look forward rather than back.

Last remark , having read both articles, I also agree that the editorial was far more negative in its approach than the main article.

I'm retired now, been working aleatory, as I was rather doing artistic works such sculpture... but my man used to be a general manager of several big establishmentsthus I know a bit of manpower and merchendises ratios.

"between unit labour costs and all the issues around hiring and firing, from a micro economic perspective, replacing workers with machines makes far more sense in France than in other countries with similar levels of economic development."

except that we are undedevelopped within such a robotisation, Germany is far ahead in that domain, I believe that German enterprises use Robotic 19% more than in France.

Would you prefer that France return to pre-seventies years? I wouldn't mind, but then again our production costs would be less sustainable.

I'm sorry for your kids, they are on the Labor market in the worst moment. I also had kids that worked in Germany and UK for their first jobs, and they came back into France, because of climate, food, Brit unreliable health care, enough of the drunk collegues... so they found a situation that isn't temporary because they had a valuable experience, also because they speak 3 languages one in Luxemburg, one in Marseille.

"it was to rent a flat in Montreal compared to Paris. In Montreal,"

That's the problem, Paris intra-muros is expensive, due to Paris attraction for foreign investors, Montreal is a extensive city where the square meter isn't so expensive, hence the lower renting loans.

"he and his 3 fellow "co-locataires" had to produce a huge list of documents including my tax returns for the previous 3 years, proof I still had a job and a guarantee from each of the 4 parents involved making us liable to pay up to 96k€ if our kids defaulted on rent payments. Sure, this landlord (landlady as it happens...:-)) "

We had too when our second son was working in Paris, that's the rules there.

"The French system has become so sclererotic and unattractive to the young"

he can go to the Puy de Dome, jobs and logements are offered there, but it's less glamourous

did you know that where it was seamless, on the Alpine border, it did its job quite well? 300 French casualties and 6,000 Italian casualties in June 1940, and they did not pass... The real idiocy was the gap at the Belgian border.

"the recent row about the closure of the Peugeot factory at Aulnay sur Bois showed there is still a very widepread belief that the "permanent" job, "

No Peugeot used tempory workers since more a decade, just that Peugeot needed more robotic for lowering the labor costs, and preferred to delocate into low cost labor country for the low-cost car models, a question of margin !

stop using the argument of the Maginot line, that is the favorite's of the frenchbashers. Besides the Maginot line fulfilled its premices, protecting Lorraine Alsace from a direct german invasion, they passed through Belgium. We couldn't build a Maginot line line along the Belgian border, wether we hadn't enough money, but rather because it would have been diplomatically irrelevant, and Belgium had its army for doing the firewall... well we know it wasn't suffcent.

I guess, you wouldn't dare to push ahead such a argument if you were a true Frenchman

Marie Claire,
I am French enough to have served for 5 years in the French army...in a parachute regiment :-) Do you know what paratroopers are mostly used for? You've guessed, outflanking static defensive structures like the Maginot Line or, in June 1944, the German's Atlantic wall.

If the Maginot line worked in the Alpes it might also just be because there were also the Alpes, a neat little geographical feature which made defense far easier than in other regions.In the north, it was easier to go through Belgium than across the Rhine but the Belgians also had their "impregnable" fortresses like the fort of Eben Emael which were quickly taken by the Germans.

Overall, if you are serious about military history, you will quickly learn that static defenses can always be overcome. Even the Egyptiens managed to get through the Isreali defenses along the Suez canal during the Yom Kippour war...

My problem with the way most of the the French nomenclatura is handling globalisation is that it is basically founded on defensive thinking and that is always a sign of weakness. The country deserves better than that and I don't think there is anything anti-French about saying that.

With that, I'll leave you and Dominique to defend l'honneur de la Patrie in your own way. Vive l'exception française and the Maginot lines of the mind.
Take care.
D

I have studied our military history as much as you, and had the opportunity to experiment it on the most difficult American military blogs during the Bush era.

in 1940 the arms were different as they are today, and or from the seventies.

If the Maginot line was so easy to overtake, mind you, the Nazis would have spared some times and bullets, as well some planes, since their goal was to make a quick war on France, thus securing the western front for turning onto the eastern front.

It wasn't that easy for the American and the Allies troops to regain the Maginot line occupied by the Germans afterword.

I love our paratroopers, especially when they support our country :-)

Be patient with the french nomenclatura, it has its equivalence in our neighbour countries

Celte 71,
These illustrations of France don't help much our debate.
"Comparing is not being reasonable", like we say in French...
I agree w/ your conclusion though: French youngsters have / must fly out of the country to make a living.
All European countries did it before us, for different reasons.
And they took advantage of it!!Nothing to be afraid of then.
As a father, maybe, as a country, just an opportunity.

TE has written quite a lot of critical contributions about Germany and other countries in the world.
But never any country has reacted that kind of extremely oversensitive as France does now.
Germans have been since ever criticized by the French and never did react oversensitive.
The statement of the author is open minded, well funded and fair.
May be reading the truth and getting confronted with reality is quite hard for some people.
Clearly the author of the article is watching the problem from his point of view from outside but this does not mean that his conclusions and statements are wrong.
Positive and honest critics can help avoiding a mess or change a mess.
So I only can express my admiration to the author for his fair and unbiased contribution.

It's not about Germany. It's not even really about France.
It'all all about UK.
Maybe we should ask other UK medias to spread out more professional and objective analysis... Well let's ask the BBC? No let's ask the bullsh#ting newspapers englishmen are eating everyday.
I guess they'll be pretty efficient as to analyse the pros and cons of working poors in UK, alcoolism of 30% of the population, 14years old girls already pregnant : maybe simplistic, but true that the british society is goin down pretty fast. But maybe the UK economy looks fine? Well,not that much without banking industry UK is about to die : all of their banks are involved in some scandal (Libor and lots of them, failure of recovery plans...). Agricultur is a huge big nothing and industry is a dead end. Please remind me again, what is UK building exactly today?
So, maybe France is not on good tracks, maybe. But one thing is for sure : UK will smell like rats before we do. And TE and all french bashers are just there to hide that.

If you prefer that the German government stays out of your affairs then make YOUR government stop asking the German government for their taxpayers' money to guarantee France's unsustainable spending habit.

so UK should be rewarded from its selfish behavior over the last 40 years?
And the fact that France has helped other European countries over the same period should be forgot at the same time, under the prextet it could now face issues, that UK is actually also facing?
So, to be consistent with your remark, french bashing is fine because France is a driver of eurozone? and UK is freed from any criticism because no one actually cares for this country falling apart?

german taxpayers have paid nothing until now, it will be different when the euro breaks down, hence all the efforts of Germany to stigmatise Hollande

"Merkel's day of reckoning as taxpayer haircut on Greece looms
Germany, Holland, and the creditor states of northern Europe have not lost a single cent on eurozone rescue packages, so far.

They have lent money, at a theoretical profit. They have issued a fistful of guarantees to Europe’s twin bail-out funds, covering Greece, Ireland, Portugal, Spain, and soon Cyprus. They have taken on opaque and potentially huge liabilities through the European Central Bank.

Yet little has disturbed the illusion that the euro is a free lunch for the surplus powers. An assumption persists that the creditors will - and should - be spared the consequences of flooding Southern Europe with excess capital.

All the losses in Greece until now have been concentrated on those pension funds, insurers, and banks that stayed to the bitter end, rewarded with 75pc haircuts for their loyalty.

We are at last nearing the awful moment when the curtain is ripped away. Greece’s economy has contracted 7pc over the last year. Public debt will spiral to 190pc of GDP in 2013. Leaving aside the Gothic horror of youth unemployment at 58pc, Greece’s debt trajectory is simply out of control.
...

Edleg: "so UK should be rewarded from its selfish behavior over the last 40 years?"

Where did I say that the UK should be rewarded?

As a matter of fact, I think that the UK, with its third largest bank exposure to peripheral Eurozone members and largest exposure to other EU countries, should pick up a larger share of the rescue packages.

As other European banks, German banks lost 75 percent of their sovereign borrowings to Greece. All other aid to eurozone countries is 'guaranteed' but becomes due in the moment one of the troubled countries defaults. This will certainly happen again with Greece, where the 'next' haircut will include some of those guarantees already given.

Greece has received a total of about 435 billion dollars (340 billion euros) in official loans to recapitalize its banks, replace fleeing capital, restructure its debts and help its government make ends meet. Minus the IMF's various commitments to Greece, totaling $170 billion up to this day, (mainly) Eurozone countries provided the difference of 265 billion USD in form of guarantees to domestic banks, which actually lent the money to the Greek state.

Only the most naive -or a 'professional liar'- can claim today that Greece will ever pay this amount fully back.

Foremost the French banks cut their exposure to Greece - as you yourself wrote some posts earlier today! Shot yourself in the foot again?? - Just too much of that cheap French wine, LOL!

Plus: During both major bond buying programs, the ECB didn’t accept Greek bonds as collateral, instead was prepared to purchase Greek bonds merely at cost. Thus, if at all, German banks could only "unload their Greek bonds to ECB" at 75% discount, since this is their market value for the last 2 1/2 years.

I know the French during my missions in Africa.
You are right they do not stay quiet.
They always preferred to discuss and tell us the story of the horse somewhere:)
My French officers always gave an excellent entertainment but nobody ever took them for serious.
With word and not Maulzu you can not win battles as youz amed eyotur experiences after the promenade of the Germans in 1941 and then in Indochina and then the same pattern in Algeria.
But I have to accept we always had our red wine or in Kolwezi our Kronenbourg and our baguettes as well as our sardines as well as my beloved Gitanes au papier mais:)
So the French are funny and quite amusing people but you never can win a war or even a battle with them.
Nevertheless I got very well paid and the whole time in France was an extremely good time of amusement.
But nobody takes that for serious. It was a well paid leisure time.
And since that time I love the humor of the French but the Italian humor is much better:)

if you 'd read Bloomberg, link you would know that that's untrue, the french banks assumed their losses, wich were smaller because french exposition on governemental Greek debt was 15 Billion, while Germany's was 22 billion

ECB never buy countries bond directly, but on the second markets, ie from banks !!!

for a expert, you're low !!!

the greek bonds that ECB bought from banks (ie german banks LMAO) didn't bear a hair cut, lile IFM's greek bonds they are senior creditors so far, hence the today dilemn for nullifying the total Greek debt

MC: "ECB never buy countries bond directly, but on the second markets, ie from banks".

Where did I say that the ECB buys countries' bonds directly?

After Standard & Poor’s Greek bonds downgrade to junk status, under the existing rules, the ECB had to render Greek bonds ineligible for collateral. ECB President Jean- Claude Trichet had announced immediately after the 'junk status' downgrade that the ECB would not change its “collateral policy for the sake of any particular country.” This is why German banks could not have, even if they wanted, "unloaded their Greek bonds to the ECB" back then. Capiche?

Only after Greece had agreed to the first 110 billion-euro package of emergency loans from eurozone members and the International Monetary Fund, the ECB invited participating countries to join the international rescue of Greece, saying it would indefinitely accept the country’s debt as collateral regardless of its country’s credit rating. Banks which, then, provided Greek bonds as collateral still owed the full face value to the ECB. Thus, the trade-in was in no way 'gifted' or 'unloaded' . . . at least not as long as the borrowing bank doesn't declare bankruptcy.

After March 2012 the ECB started to accept Greek bonds only for its write-down value after the hair-cut.

"Plus: During both major bond buying programs, the ECB didn’t accept Greek bonds as collateral, instead was prepared to purchase Greek bonds merely at cost."

that's where !!!

"ean- Claude Trichet had announced immediately after the 'junk status' downgrade that the ECB would not change its “collateral policy for the sake of any particular country.” This is why German banks could not have, even if they wanted, "unloaded their Greek bonds to the ECB" back then."

find me THE link !!!

but I got one for you, when German banks were shorting the Greek debt, only for the sake of filling the banks with liquidities, whereas, it was officially banned by Merkel, (since then we know that she tells one thing and commands another) also when Sarkozy had requested to the french banks to not play casino with the eurozone indebted countries, which they accepted as a fair game for not underming the weakest links, but the Germans Banks acted of self interest

"Some financial experts believe that Merkel is acting in the interest of German banks which hold billions of dollars in sovereign paper in Eurozone paper. Defaults could swamp the balance sheets of those banks.
But, the real reasons behind Merkel actions may be more complex and sinister. There is a great deal of evidence that some of Germany's large banks have bet against both the euro and sovereign debt in the weakest nations in the region. If so, these banks, like other speculators, probably made billions of dollars on such deals.
Merkel may have to deal with the accusation, probably an accurate one, that Germany allowed its banks to take sides against the euro as the government helped drive its value down. How would it look if Germany then left the Eurozone and its banks became, under a set of circumstances helped by Merkel, rich in the process?"

From: Transcript of the questions asked and the answers given by Jean-Claude Trichet, President of the ECB, in Frankfurt, 14 January 2010 (Quote from Q&A):

Question: You just mentioned confidence. Are you more confident now than, let us say, five weeks ago that the Greeks will actually be able to reduce their budget deficit to less than 3% by 2012?

And let us say Greece’s credit ratings were BBB+ across the board in December: would you consider delaying a return to the old collateral rules?

Trichet: We will not change our collateral framework for the sake of any particular country. Our collateral framework applies to all countries concerned. And that has been said already by the Vice-President, by me and by colleagues. That is crystal clear."

BTW, April 27, 2010 S&P downgraded Greece ratings into junk status.

Reuters: - "Standard & Poor's on Tuesday downgraded Greek ratings into junk territory on concerns about its ability to implement the reforms needed to address its high debt burden."

Banks are not 'countries'. Banks exist to make profits, not losses. Banks do what they always do and did: They handle money and don't want to make losses. That's their job - worldwide. If they fail to do this, they cease to be 'financial' institutions pretty soon. Show us any *checkable* data, e.g. from BIS (not a mere speculation), that proves that French banks acted more 'noble' than other banks.

the CAP subsidies are a help for exportation, otherwise the european agricultors would have too high costs for producing, it's for big farms and agroalimentary

Hmm, France is the second net contribuator, (9/10% of Germany's), she might be the first recipient of CAP, but she also the biggest EU agricultor productor(27%), though UK only product 6% of agriculture goods and get the half of our CAP subsidies, and we are paying the largest part (by far) of the UK rebate

What's the big deal with peasant subsidy? That's to use taxes paid by advantaged sectors to bolster affordable and sustainable price of food-stuffs, so that the French can afford something to eat and to protect French peasants from being killed by hostile peasants like you.

I have no problems American tax payers subsidising American farmers. So is for French citozens subsidising French farmers. The problem is that non-French tax payers's money is used to subsidise French farmers. Why poor Bulgarian and Polish farmers have to pay higher taxes to make French farmers richer?

There should be some kind of disaster-insurance for farmers, but that should be it. No need to subsidize European farmers so that "asiatic mobs" can be be fed cheaply.

If there is food shortage in specific segments, the individual countries (or even the EU) can earmark limited production incentives. But, again, that must be precisely circumscribed, clearly 'aimed' and finite-narrowed.

CAP channels huge EU resources into 'yesterday's' processes of production instead of guiding these huge funds towards (supervised) development of future industries, especially in the productivity-weak periphery.

And how will it work when France has arrived the level Greece?
I prefer to feed the Asian poor people .
They are more important as anybody else.
Asian people are a good investment of charity because we know meanwhile how Greek people are regarding support from Europe.
The Greeks are only YOUR friends, in Germany they do not have any longer friends.
The Greeks each of told them what they think about the Germans and since that time like most Germans I never will enter a Greek restaurant again because too many Germans daily make the most horrible experiences by the risk of their lives.
It is quite usual that German guests are stabbed in Greek and French restaurants in Germany.
And Germans actually should better avoid completely France as our department of foreign affairs today has warned the public.
In Alsatia and Lorraine hundreds of German cars have been burned today and Mr.Hollande and his government were encouraging the Alsations and Lorrraines to increase their efforts against the dirty Germans.
I think this must be your complete satisfaction as it is for each Frenchman.
A great day for France and the French as they like since ever by their aggressive nature.

bs, it's Paris and Berlin, though Berlin wants that the contribution stabilises at 1% of PNB, means hair cuts in PAC (for everybody), Cohesion funds, structural funds, that's where the new EU members aren't happy

of course UK doesn't want CAP, because it goes mainly to the queen and dukes, all big land owners, the Dutch don't care as they have bought lands in France, spain, Africa, Tenerife... to grow bananas and tomatoes with the CAP of France and of Spain

You don't get it. This is not a question of how much each recipient gets. In times of general belt-tightening the huge CAP scheme is sheer insanity . . . no matter if French or German farmers benefit from it or not.

In Germany it's merely the gigantic farming-factories in former East Germany which benefit from CAP. These factories don't need to be subsidized, IMO.

If CAP subsidies are lowered as planned, Germany would lose approx 400 million Euros, much less than her contribution to the CAP funding, since 47 percent of the total EU budget are earmarked for CAP subsidies.

"Do you think that Germans are that dumb to finance solely french farmers with their huge budget contributions?

It's mainly Paris which wants EU farm subsidies to be kept at least at 2013 levels, and said it will "threaten to veto" the talks should CAP spending be radically lowered.

It's, besides the U.K., the Netherlands and Germany that want to see CAP reduced."

my purpose for that psot wasn't to tell you if I agree or not, but to show you the exact numbers.

Since you saw me surfing on TE, you should know for a long time that I would like no EU and no euro at all, and that the 20 billions euros that we deliver to Europe each year would be much better employed in France, and there would not be such a galloping debt !!!

MC: "I would like no EU and no euro at all, and that the 20 billions euros that we deliver to Europe each year would be much better employed in France".

It's completely unimportant for the fate of the European taxpayers what "Marie" or "la.výritý" want. We are debating here the political facts as they are. Fact is that your government wants EU farm subsidies to be kept at least at 2013 level and fact is also that your government wants eurozone cross-border mutualization of debt and cross-border merger of bank liabilities.

This is MORE lopsided eurozone entanglement ... and not less, as you claim to favor. If you'd say the truth, why, then, tell us, are you supporting Mr Hollande's demands (towards Merkel) to intertwine ever more into this direction, and this without proper democratic checks and balances?

I as an outsider, for example, don't favor either direction. But political logic tells me that if there is more cross-border entanglement then the Europeans need more cross-border checks and balances as well, hence ceding some national sovereignty.

But you want both: Other people's money but no cross-border checks and balances 'against' France. This won't work.

There are two differences between Spain and France. 1. Positive. There are 32 French companies in the Fortune Global 500 (same as Germany with a population 25% smaller...) and only 8 Spanish companies (one more than Russia, and same as Brazil) 2. Negative. Spain´s Government intervention in the economy is similar in percentage as Germany, and close to the U.S. (about 40% of the economy) while in France it is over 50% of the economy. And Spain´s public debt is lower than France´s, U.S., Italy or Britain.
Important is the fact that the universal health care system in Spain takes just 7% of GDP, half Germany´s and severall points lower than France´s (not to talk about the U.S.) and life expectancy in Spain is higher than in Germany or America. Probably, the cause for Germany´s high spending in the health care system is the great number of old people. Perhaps Germany needs the immigration of 1 million German-Brazilians from Southern states like Santa Catarina, Rio Grande do Sul or Parana...but precisely the level of life in those states is ot so bad. Another choice is bring 1 million young German-Americans and half a million German-Kazakhs and German-Argentines...

France still enjoys the second GERD (Gross Domestic Expenditures in R & D) and in the Global Competitiveness index 2012-13 it is at the same level as Australia and South Korea, so still among the highest in the World. Its infraestructure is very good and its health care spending is lower than Germany´s or the U.S.

Even if companies like Renault are Government-owned, it is not a problem as far as they are well managed, and Carlos Ghosn has done a very good job, not just in Renault but also in Nissan. In fact, Renault´s partnership with Nissan has been very successful while Daimler´s investment in Chrysler or VW in Suzuki have been a failure. Not less important is the Governemnt participation in EADS, which has been also successful (in fact, BAE Systems tried to merge with EADS thanks to the success of Airbus...)

So, I don´t have any doubt France has many strengths. In fact, it is the 5th largest economy in the World (Nominal) only surpassed by the U.S., China, Japan and Germany...all of them nations with a bigger population. Even if at PPP France falls to 9th place behind India, Russia, Brazil and the U.K (IMF) or 8th place (World Bank) ahead of the U.K.

So, France can undertake reforms without problem, if necessary under a Great Coalition.

The number of fortune 500 companies doesn't mean much as they are mostly Fascist companies. Note that the value of fascist companies is very little for the economy, because they are very much limited in domestic markets.

Interesting idea to bring all this German rooted Brazilians, Kazakhs, Argentines and Americans back although, I fear, that they may be the children of Nazis having fled around 1944/45? As long as they do not bring back these old sick ideas they are very welcome, as Germany, definitely, would offer them a better life style. I hear that Brazil, although a lovely country, suffers greatly from security problems which, surely, they should manage to overcome?

Why only 1 million German Americans? I would have thought we are talking about more than 20 or 30 million who are, however, Americans with German roots, more likely and why should they move here? America has got space, raw materials, dynamism, positive demography. More of a future than Europe, no?

In recent years France has dropped dramatically in the competitiveness its model relies on. Despite no longer being even in the top 20 of the WEF rankings, it shows no sign of stopping this rapid fall. They (including the UMP) have no appetite for even the limited labour market reforms other social democracies made decades ago. The GDP ranking is a comfort blanket and not that useful. Where would France be if Germany, Austria, Finland etc did not give the Euro its value? If France floated its own currency their GDP would drop 20-30% almost instantly in Euro or USD terms. And their banks look like they will need a bailout adding to the EUR2 trillion debt pile. They have the biggest exposure on Greece.

You are wrong about German-Brazilians. There are over 5 million German-Brazilians, above all in Southern states, and most of them arrived during the last decades of the XIX Century and first decades of the XX Century. Anyway, if several thosuands are descendants from Nazi leaders, or even grandchildren of Adolf Hitler, that is not relevant because we are in 2012 and this century the only nation which has invaded foreign countries in the U.S. (Afghanistan, Iraq and Libya), not Germany.

About German-Americans, there are over 50 million according to the U.S Census. In fact, German-Americans are the first ethnicity in America, and have been so for decades. You are right that probably few would return to Germany, and less now that North Dakota (over 40% German-Americans) is enjoying an energy boom. Anwyway, among more than 50 million people probably there are at least one million without work, and part of them can be attracted to emigrate to the mother country...

Easier is the immigration of ethnic Germans from Eastern Europe and Central Asia, but now Russia and Kazakhstan are growing more than Germany...

Spain is not a Federation but a singular Administration with some federalist elements, but it wouldn´t be a good idea for France to imitate the Federalist idea because it is too much expensive. In fact, Germany had turned more centralist to avoid duplication of costs. And so tries to do Spain in some areas. Federal states oftenly fall out of control because politicians spend money they don´t have just to win the local Elections.

In "The World in 2012" there was a chart about post-recession winners and losers (differenc, in %, between per capita income between 2007 and the forecast for 2012) According to that chart:

U.K. -5.3%
u.s. -2.7%
FRANCE -2.5%
JAPAN -0.7%

GERMANY +3.5%
RUSSIA +10.2%
BRAZIL +14.3%

But the forecasts about GDP have failed somewhat.

The U.K.´s GDP is now forecasted to decrease -0.2% (It was forecasted to increase 0.7% in "The World in 2012")

The U.S.´s GDP is now forecasted to increase +2.2% (It was forecasted to increase 1.3%)

Germany´s GDP is now forecasted to increase +0.8% (It was forecasted no growth in "The World in 2012")

France´s GDP is now forecasted to increase +0.1% (It was forecasted no growth in "The World in 2012")

Brazil´s GDP is now forecasted to increase +1.55 (It was forecasted to increase +3.5%)

So, now the Chart about Winners and Losers (taking into account demographic increse. 0.1% in Germany and Russia. 0.5% in the U.K. and France. 0.8% in Brazil and the U.S.) in the post-Recession would be about:

I just love watching the UMP self destruct as it is doing right now on LCI. Both candidates win! Banana Republic anyone. And before any bleeding heart Socialists think that I am on their side all I have to say is ....REIMS. I now do believe they are are even more stupid when it comes to elections than the state of Florida. Thank you Nicolas Sarkozy.

The Cocoe has spoken. 98 votes separate Mr. Fillion and Mr. Copé. The Cocoe recognized that their were irregularities in the voting but screw it, the holiday season is coming up and vacations are "en vue"

Quite easy the whole thing.
The French have to face reality .
They are on the very same level like their buddies and closest friends from Greece, Spain and Portugal.
I can see not any difference between the Greeks and the French.
Both countries are on the very same level. Unfortunately.
Only Italy was intelligent enough drawing the right conclusions:)
So we are looking forward to a happy Europe.
But France does not count anymore because it is out of the game now.
Germany is getting very lonely now.

Herr Ambassadeur. Would you care to tell us what you are trying to achieve with your post above? Does it bring some useful insight to anything or should we just consider that today you were dumped by your girlfriend, then had your wallet stolen by a pickpocket just before losing your car keys down a drain thus feeling an irrepressible need to vent?

Currently, France's government debt stands at 1,910 billion Euros, which is 92% of GDP. Hollande’s government will add another 125 billion Euros debt this year, which will bring France’s level of debt up to 2,035 billion Euros. This is pretty close to 100% of GDP (France’s GDP will be approx 2,070 billion Euros this year).

100% debt of GDP is usually the threshold from where debt it becomes ‘unsustainable’ in the eyes of investors, domestic and foreign. At this point rating agencies will follow suit. 10-year bonds yields will gain, not quite to 4.8%, as Italy’s current level, but most certainly to somewhere between 3.6 and 4%.

Currently, France pays 56.535 billion Euros on interest every year. An average bond yield rise of 1.5% would add to France’s yearly interest cost another 30.525 billion Euros, bringing it to 87.060 billion Euros per year . . . and rising with the increase of debt.

This, then, would be the beginning of the “peripheral syndrome” (or PIIGS-spiral) for the French Republic. . . Nobody, then, can help France anymore.

Herr Ambassador is an acquired taste. He is a proud German who grew up proudly in the Soviet Union (Kaliningrad) where he proudly served in an elite military unit.
He prefers irony or "shooting at zero" as we say in Italian. He also believes all Europeans have basically remained racist against Germans, except for Russians, who are the only ones to actually RESPECT Germans. So, Germany should dump the EU for Russia and China.
Note that virtually all nations in Central Europe were taught that the EEC/EC was an American puppet designed to attack Communism and the Soviet Motherland. Most of the nations in Central Europe (one thinks of Poland) believed none of it (or were happy if it were true). Apparently not everybody in Central Europe.

I quite like him, btw. Even if I do not agree politically. What's a political argument without a bit of salt and pepper?

Wow. Is French debt really about to hit 2.035 trillion? Italian debt is expected to hit 1.98 trillion, which means that after having been passed up by Germany two years ago (we were the world's THIRD LARGEST DEBTOR for 20 years, then dropped to fourth) we are about to drop down to the world's fifth largest debtor?
A bit disappointing really. And dangerous. As long as we were the world's third-largest debtor, nobody could really afford to disregard us...

BTW, as I never tire of pointing out, our 10-year bonds on the SECONDARY market are at 4.8%.
However, the average interest rate on our debt is at 3.7%, while we recently sold 3-year bonds at 2.4%.
French bond yields, btw, have been reliably and consistently about 300 basis points below Italy's. I fail to see how France is at risk - although admittedly, when debt exceeds 100% of gdp alarm bells should start going off.

Personally, I hope the speculators attempt to hit France. S&P and Moodys would quickly downgrade Paris again - which would lead, finally, to direct European action on a new Ratings Agency. I am sick of Italy being a whipping boy for S&P. With German approval, no less.
With friends like these, who needs Hitler?

Milovan,
Thanks for enlightening me. Living in the most Germanic part of France, I actually have a very positive opinion of Germany and Germans but I dislike posts that are so deliberately and gratuiteously provocative. In this particular case,the post was also factually totally inaccurate.
Among other things, contrary to the Greeks, the French administration is remarkably efficient at tax collection, probably world class..:-)

No! Rightly the alarm bells should start going off before government debt exceeds 60%. Approaching 100% is hardly manageable if others than the government itself decide at what interest rate the county can borrow. This is the dilemma the GIPSIs are in currently.

GermanAmbassador is a former Soviet trooper that was occupying eastern Germany when the Berlin wall fall down, he opted thn for a german passport, but had no employ anymore, thus he applied for a position in our Legion Etrangère, that he got. Though his discoursee is of a basic trooper, for anything German and Russian, he would love a union Russia + Germany

LV is a übernationalist German that lives in the US, anytimes he intervens it's for Germany über Alles, as a offspring of former Nazis

Germany's debt is 2,200 trillion euros, apparently still sustainable because of your surpluses that keep to bring your country surfing on a lesser harming unemployment

though there are some social checks that will come to term in the following years that will rise significantly German debt, some say, it's already 7 billion euros.

"Contrary to the reported public debt of 2 Trillion Euros, the true German debt may well total 7 Trillion Euros as per calculations by Bernd Raffelhueschen, an economics professor at Freiburg University.

Germany has other liabilities due to shortfalls in the social security and pension funds and this hidden German debt is estimated to be worth 5 trillion Euros, Bernd Raffelhueschen stated in Handelsblatt, a leading German newspaper reported. That puts the total German debt at 7 Trillion Euros against the officially reported 2 Trillion!!

If the figures turn true, then the ongoing European financial crisis may turn into a nightmare given that Germany is the largest economy in the European Union."

I understand then why Germany is pushing for some more integration, but at her condition, like we were helping Germany to pay for her reunification with higher interests on our credits, cuz of the EMU, then it will be a global participation from EZ countries, and possibly rom the whole EU, hey wasn't Merkel praying UK to not leave the EU, and wishing that Poland integrate the euro zone?

Are you really buying into LV assertions? that are but twisted views on real facts?
there's no chance that the investors will dump France, because France still has a basic economical ground that will never get a chance to be delocated, also because France isn't a aging country. Still today, funds from China, the US, UK, the Arabs countries,Russia, the Caimans, are coming in, and at negative interests
La France, numéro 2 de l'investissement étranger en Europehttp://www.boursorama.com/actualites/la-france-numero-2-de-l-investissem...
"Personally, I hope the speculators attempt to hit France. S&P and Moodys would quickly downgrade Paris again - which would lead, finally, to direct European action on a new Ratings Agency."
I see your usual remnent envious italian feature that would like a France below Italy, that was also the Mussolini wish.
But if you want a Italy regaining her reputation as a reliable country for the markets, you'd better ally with France and Spain for forcing Germany to leave the euro, or to let ECB doing its job as a central bank. Though, I don't believe that today the situation is sustainable, the US are facing a major debt crisis, too, and as all our economies are interconnected through banks and businesses assets, it will be a global dooming

Never I have been dumped by a girl and never a pickpocket dared to steal my wallet.
I just was describing the actual situation of Europe in its actual condition.
It can not bring to anybody a useful insight because nothing will change as European politics all over Europe is confirming.
So intelligent Europeans better should get prepared to the big Euro-crash which is coming quite soon.
The Brits have learned their lesson from Europe already and so it is clear to me that they will leave the EU and Germany should also draw the right conclusion by leaving the sinking ship of Europe as long as they can.
It is more than obvious that this type of Europe is a lost case.
It won't take a long time until the rest of Europe, including Germany will be at the very same level like Greece.
The European experiment and illusion is over.
You only can unite what is similar but you can never unite rifts and extreme contrasts as we have them in Europe stronger as ever before.

The only common institution of all Europeans is the ECB where they are going to get their money if they need new money. But this is the only and unique common ground of Europe.

MC: ". . . for forcing Germany to leave the euro". - This would be in the interest of the German taxpayer, I guess.

MC: ". . . let ECB doing its job as a central bank". LOL!

A real "national bank" needs first of all a common tax base to 'collateralize' its liabilities. Thus, the ECB might be called "central bank" but it can never become a true "lender of last resort" because it lacks the most important lever for that: A powerful treasury with ambit-wide revenue powers.

Where, then, would YOUR praised 'French sovereignty' be left? You seem not to think beyond the rim of your coffee cup.

"A real "national bank" needs first of all a common tax base to 'collateralize' its liabilities."

yet but no german taxes were collateralize ECB bailouts and though Germany considers ECB as her Bundesbank bis, just good at bailing out german banks

"Hey, Germany: You Got a Bailout, Too"

"It’s hard to quantify exactly how much Germany has benefited from its European bailout. One indicator would be the amount German banks pulled out of other euro-area countries since the crisis began. According to the BIS, they yanked $353 billion from December 2009 to the end of 2011 (the latest data available). Another would be the increase in the Bundesbank’s claims on other euro-area central banks."

MC: "Germany has other liabilities due to shortfalls in the social security and pension funds and this hidden German debt is estimated to be worth 5 trillion Euros".

Germany adjusted to that problem and raised the retirement age significantly. But how does this leave France with much bigger "future shortfalls in the social security and pension funds"? . . . And a French youth unemployment rate among the future contributors to the French pension funds of 22.9 % (as of September 2012), compared with Germany's youth unemployment rate of 8.2%. Pension security is not a question of how many 'youth' a country has, but how many will pay into the system.

And: A successful economy will solve these pension shortfall problems easily through youth immigration, while a country like France, with a youth unemployment rate of 22.9%, will merely add more 'hungry mouths' to feed to the system.

Der Spiegel 11/16/2012:
(Quote): "Economic crisis and mass unemployment in Southern Europe have triggered an exodus of highly qualified jobseekers, many of whom are making their way north to Germany. There, a relatively strong economy and growing shortage of skilled workers makes companies eager to ensure that the newcomers feel welcome." - " 'We always take them under our wing,' says a company spokesman (Rainer Grill). 'Our employees take the new arrivals to soccer games or go bowling with them.' . . ."

" 'Attracting skilled young foreigners -- and making them want to stay -- is crucial for the company and its 800 employees. We need specialized mechanical engineers, and we always have positions to fill,' Grill says."

"As odd as it might sound, the euro crisis has been a boon to companies like Ziehl-Abegg, and the flood of qualified jobseekers fleeing mass unemployment and recession in Southern Europe shows no signs of abating. Indeed, in the first half of 2012, some 182,000 of them (young skilled jobseekers), came to Germany -- a 35 percent rise over the same period in 2011. The number of Portuguese and Spaniards in the country has doubled over the last year, while the number of Greek immigrants has risen by 78 percent. There's also been an influx of young qualified Hungarians."

" 'It's great for Germany,' says Herbert Brücker, an expert on migration at the Nuremberg-based Institute for Employment Research (IAB), the research arm of Germany's Federal Employment Agency. 'Some 50 to 70 percent of immigrants are university graduates', he explains, 'with much-sought-after degrees in scientific and technical subjects'. However, Brücker also notes 'that there's plenty of demand for caregivers and nurses'."

"What's more, these new employees also have a positive multiplier on the German labor market: Every time an engineer is hired, a number of specialists and support staff are hired as well. Media coverage of these hiring gaps has only heightened Germany's appeal as a job destination. After a Portuguese TV team reported on the trouble Ziehl-Abegg was having filling open positions, its personnel department was inundated with some 1,500 applications, mainly in Portuguese and English."

" 'It took us months to work through them all,' says Grill".
(End quote).

Neither the German government nor German banks got so far 'a penny' from the ECB. German banks received aid from the German SoFFin fund in 2008/2009. The fund is filled to the brim now, after all (but a few) German banks have paid back in full the received SoFFin asset relief funds.

"Germany adjusted to that problem and raised the retirement age significantly."

the rement german refrain, 67 years old will be implemented in2029, when it will be in 2023 for France, and still, today, we are required to have worked during 41/42 years, while for Germany it's 35/37 years

don't worry for our pensions, we aren't a aging country, among your contribuators how many only have a salary of monthly €400? so far 7 3illons german workers are on part time jobs.

yet these southeners guest workers will never take the german nationality, as soon as their economies will recover they'll go back to their countries, because Spanish miss the night life, in Germany after six in evening, there's nothing to do, especially if these guest workers are in province, lots prefer to work as waiters in Berlin then.

even, the greeks that have been in Germany for decades feel the german dislike on them today

"Germany's role in creating the bubble
In the current environment, some of us tend to forget that Germany was in dire straits for more than a decade after the reunion with the former East Germany. The formation of the united Germany in 1989 was made on outrageous terms. For one - equal salaries for those living in the former East Germany, even though productivity was 10% of what it was in the old West Germany! This took a toll on the country, and was still felt in the new millennium. This put the ECB to the test, and the low rate to help Germany was made at the expense of risk put on other countries in the Eurozone. The monetary mishaps in this period are what we see the consequences of in the markets today."

Offering life support for Germany had some dire consequences for countries like Spain. Looking at chart 3, it is obvious that the ECB rate in the early 2000s and the low rate in the late 1990s was below the Spanish inflation rate! This is really not good policy and shows that one-size-fits-all does not necessarily really fit all, at least not all the time. This period took over from the convergence of the long bond yields as the negative real rate kept the pot boiling.

ECB interest rates were set low for Germany's convenience, but their impact on the Spanish economy over an extended time frame set the stage for a very large and extended housing bubble. Looking at the long term trend, it seems as if there are about 3m houses too many in Spain at the moment. The willingness from the banks to lend out money has now come back to haunt them. We are in for a prolonged period of hard times in Spain as this mess is untangled."

"Very simply, German Nationalists have seized upon the economic crisis to attempt to torpedo the common European currency."

________________________________

Yeah, right.

Milovan/Joe, I understand that some among us – and you are of course one this blog's more prominent examples – need conspiracy theories and scapegoating to make life's complexity tolerable.

One wonders, however, what it takes to be so impermeable to facts as you are.

Not only are the German government, opposition, business leaders and intelligentsia strongly pro-EU and pro-EURO, but all polls show that the German people are still MORE STRONGLY in favor of the EU and the euro than the populace in any other big EU-euro zone member state – and that even though they suffered greatly after the loss of their beloved deutschmark.

Since 1999 (start of euro), German wages have risen by about 10 % (inflation-adjusted), while Italian wages are still about 25 % up, not to speak of Portugal, Spain and Greece, who destroyed their own competitiveness by helping themselves to round after round of extra-hefty wage increases until the house of cards came tumbling down in 2008.

The Germans simply put the pain that came with adapting to the common currency behind themselves faster – without asking for help, mind you.

MC: "the rement german refrain, 67 years old will be implemented in2029

Not knowing exactly what "the rement german refrain" means (what cheap wine are you drinking?), I assume that you were trying to say that the new retirement law will "not take effect before 2029" (am I at least in the ballpark??).

Why do you post comments here which expose that you merely 'blabber', without any real knowledge or understanding of the subjects you write about - especially concerning posts that deal with other countries than France?

The early retirement age is implemented in Germany already. All changes began to take effect at the beginning of 2012. 2029 will be the year when, under this scheme, people born in or after 1964 will have to work until 67 to reach the statutory retirement age and receive full public pension benefits.

Beginning January 1, 2012, the retirement age started to be raised by one month each year, and from 2024 onwards by two months each year. By 2029 all people will have to be 67 in order to receive full statutory benefits, unless someone falls under a disability pension scheme.

MC: "yet these southeners guest workers will never take the german nationality, as soon as their economies will recover they'll go back to their countries, because Spanish miss the night life".

Again, this moronic comment proves how little you know about Germany . . . and the little you claim to know is full of racism and narrow-minded provincial French prejudice.

Fact is that Germany, as of 12/2005, has by far the largest foreign-born population (10.144 million), followed by France (6.402 million), the UK (5.812 million), Spain (4.82 million), Italy (2.523 million), Switzerland (1.756 million), and the Netherlands (1.626 million). 46% had acquired German citizenship by 2005.http://migrationinformation.org/charts/pop-table2-jun06.cfm

Today, almost all former 'gastarbeiters' hold German citizenship. Their children became fully integrated 'Germans'. An exception to this rule is the Muslim Turkish minority in Germany in which first generation immigrants who hold a German passport are still below the 50 percent marker.

The new arrivals to Germany from Spain, Greece and Portugal are highly educated and will assimilate even faster. This doesn't mean that they will spend a lifetime at the same place or 'in Germany' at all. This would contradict the idea of a more flexible Europe, similar to the USA where people seldom retire in the same state where they were born or have worked.

It would be only normal that a Spanish-German retiree retires in a sunny place which language he also speaks, as it is quite normal for someone who earned his money in New York or Massachusetts to retire in Florida or Georgia.

Indeed, the Landesbanken are nobody's business but that of the German taxpayer - because he owns them.

If the German taxpayer is not capable anymore to bail out his own banks when needed, then the Euro project is history anyway. It's like the ECB demands to scrutinize all French government-owned businesses. As long as the French state doesn't demand a bail-out for its enterprises this is nobody's business - unless there are other shareholders as well.

I agree that the timing for the introduction of the Euro was disadvantageous for Germany so soon after reunification, nothing else was stated by the German Bundesbank at the time.

As long as the Bundesbank was in charge of the money supply, it could level out the uncompetitiveness of Eastern Germany (at a productivity level of 10% of what it was in the old West Germany, as your citation rightly stated). Nothing else I was telling you all along to counter your steady ridiculous claim that the euro introduction "was to the advantage of Germany". This fact was the main reason that the Bundesbank was fighting Germany's euro membership - at least at that point in time - tooth and nail.

Bundesbank's Helmut Schlesinger and later Hans Tietmeyer had forwarded exactly these reasons to all the national banks in the member-states of the EMU currency snake.

Still, all GIPS governments, with France under Mitterrand as their spearhead, pushed for a participation of Germany already in 2001. The Bundesbank made it also clear that, if at all, a participation of Germany would require a low interest rate in order to continue sufficiently to bear the reunification cost.

Isn't it a bit hypocritical to complain that the barn door isn't closed after the horse has already escaped?

"ndeed, the Landesbanken are nobody's business but that of the German taxpayer - because he owns them"

oh then, it's not Germany's business to scrutinise spanish banks too

"If the German taxpayer is not capable anymore to bail out his own banks when needed, then the Euro project is history anyway. It's like the ECB demands to scrutinize all French government-owned businesses."

completly stupid, ECB doesn't scrutinise businesses but banks and sorry all the french government businesses are in good shape, as they are globalised businesses, EADS/Airbus, EDF, Ariane Space...

"I agree that the timing for the introduction of the Euro was disadvantageous for Germany so soon after reunification"

not what Kohl thought, in the contrary it helped him to diminish the difference between eastern Germany workers's wages and western Germany workers's wages.

Mitterrand wasn't pushing for anything

What I already wrote x times on this board :

Mitterrand was going to throw the EMU baby and its water in 1992 when the franc was attacked with the pound and the lira, Kohl decided to rescue the franc for good reasons, France has always been the center of the EU scheme, without France, no EU, no euro, and as he didn't want that Germany became isolated....

Besides he needed the euro for absorbing Eastern Germany, it gave more time to the Ossies to adapt, as the euro was rating much lower than the DM at its begining (lower than the dollar too)

The euro was in the EU commission books since the seventies, just that Kohl took the reunification opportunity to promote it, without explaining why to the German population who would have rejected it. But still the Bundestag could have done it, and didn't, though none had a knife under his/her throat then

"Mitterrand, stricken by prostate cancer, was pale and drawn when he greeted Kohl on September 22. But he came straight to the point, telling the Chancellor – according to secret transcripts – that France might have no option than to leave the EMS. Kohl claimed to be unaware of the gravity of the crisis – prompting a Mitterrand tirade against the German central bank: “The speculation has been unleashed… I am aware of the independence of the Bundesbank, but what does it want? To remain the last one standing on a field of ruins? Because it will be a field of ruins.”

It's true! But why should it be 'a sinecure' to work in Germany? If this is different in France, then I know were France's current downfall comes from.

Important for the economy is that people living in Germany work hard and pay contributions into the social security system. If they later retire somewhere else is entirely their private matter. Hundreds of thousands of Germans retire in Spain or on the Balearic or Canary Islands as well. Why shouldn't native Spaniards or Portuguese do the same?

My comment about France being attacked by speculators was purely ironic. I completely agree with you that France is in much better shape than one would think from reading this article.
I also agree with you that Spain and Italy should ally with France - and more importantly, I have been arguing that, counter to the disaggregation happening in the Euro-zone, France and Italy are moving toward closer economic integration.

I agree with the idea of problems all around. But I still think Japan has a lot of potential to trigger a worldwide crisis - even if their debt is mostly held domestically. If the world's second or third largest national economy goes officially into default, it will not be a good sign for the international economy.

1) Portuguese wages are in general lower than those of Poland and the Czech Republic - no, their wages did not rise strongly.

2) Italian wages have risen 25% since 1999? Are you crazy? Does it occur to you that nobody believes the inflation index here, while housing, petrol and food/clothing prices (measured as against the SAME QUALITY AS 1999) have more than doubled? Do you really think that a 25% increase in wages over 13 years renders a country uncompetitive?

"The Germans simply put the pain that came with adapting to the common currency behind themselves faster – without asking for help, mind you."

So who's asking for help? I am demanding it for Greece - because otherwise the crisis there is going to cost us a lot more money than necessary.

We'll have no time to do anything, Merkel is stalmating untiel her elections, just keeping promisses to sort out the euro problem until then, but will never deliver anything, in the meanwhile the German banks are unloading their bad bonds to ECB, when the dischargement will be over, the Germans will be ready for the big jump

Germany was not against the Euro, but not at that point in time and not with countries that run debts of over 100% of GDP. This is a historical fact!

The whole world knows that Mitterrand arm-twisted Kohl into accepting the Euro anyway, in return for accepting Germany's reunification.

Prof. Martin Feldstein is a authoritative, competent and neutral contemporary witness of the events at the time. He chaired President Ronald Reagan’s Council of Economic Adviser until 1989 on the eve of the German reunification, is Professor of Economics at Harvard University and President Emeritus of the National Bureau of Economic Research. Prof. Feldstein was politically involved in the events on the American side when it happened.

Prof. Feldstein wrote May 26, 2012 (Quote):
"Germany resisted the euro, arguing that full political union should come first. Since there was no chance that the other countries would accept political union, Germany’s position seemed like a technical maneuver to prevent the establishment of the single currency. Germany was reluctant to give up the Deutsche Mark, a symbol of its economic power and commitment to price stability. Germany eventually agreed to the creation of the euro only when French President François Mitterrand made it a condition of France’s support for German reunification. Moreover, under pressure from France, the Maastricht Treaty’s requirement that countries could introduce the euro only if their national debt was less than 60% of GDP was relaxed in order to admit countries that were seen to be “evolving” toward that goal. That modification allowed Greece, Spain, and Italy to be admitted" (End Quote)

Germany's established - together with the main German banks - the SoFFin bailout fund. The fund's spreadsheet is open for everyone to see . . . and it is voluminous enough to allow for all possibilities.

Why, then, should the ECB be scrutinizing German banks first since Germany doesn't need and never asked for a mutualization of its bank liabilities??

Wouldn't it be normal and logic to start with the banks of those countries that are obviously in such trouble that their governments are fighting tooth and nail for a banking union with German banks?

Nobody hinders France, Italy and Spain to set up their own cross-border bank supervision and share each other's liability risk! Why are all three insisting that Germany takes over the risk for their domestic banks, while Germany has absolutely no interest that France or Italy or Spain 'guarantee' German banks?

Germany made very clear that it will not need money from a cross-border fund to 'secure' its bank deposit. It's France, Italy and Spain who want that German banks take over the risk of their domestic banks. It's an old saying: Who ever orders the feast must bear the consequences.

Since the ECB didn't even start to set up a eurozone bank-supervision, it is, logically, more important to start with those countries' banks whose governments want other countries to share their 'foul' banks risks - and not with those that never asked for a mutualization of their liabilities in the first place, as a natter of fact - don't even want it.

For an outsider it becomes quite obvious that the French, Italian and Spanish "Hooplah" about German Landesbanken is merely a diversionary tactic to distract from the huge problems their own banks are having. They hope to get the 'banking union' started this way, without giving enough time to an ECB supervisor to scrutinize their banks at first.

Do you really believe that Dr. Merkel is "mit der Bananenschale aus dem Urwald gelockt", as the German proverb goes?

Better start your own 'banking union' if you're in a hurry, scrutinize happily each other your own banks . . . and, please, don't wait for the Germans. They'll never buy into your foul tricks.

"The whole world knows that Mitterrand arm-twisted Kohl into accepting the Euro anyway, in return for accepting Germany's reunification."

that's the version displayed by Germany !

Felstein, is a avered anti-French, been reading a few of his articles full of Sh_t, like some AIPAC racist Jews are in the US, for such persons we are worst than the muslim Jihaders, we are the worst anti-semits of the planet, we were responsible of the Shoah... their propaganda is beyond facts and relevant source that anyone can object to them. I have been crossing my sword with them for the past decade

But I understand that he is for you a relevant source, because he added into your bias !

if Germany want a fiscal EZ federation, she'll have to show her accounts, for transparency, that she forces on the other, while arrogating herself the right to cheat !

French Banks, again, aren't hiding junks, nor the Italian banks, we learn't together to make banking in the middle-age with the Medicis, while the german lands were coping with trousers buttons

The German banks are full of junks from the american housing bubble, the irish housing bubble, the spanish housing bubble (ie my earlier link) and were in bed withe spanish banks. Isn't it funny that also the spanish banks were hiding junks, that they progressively unveiled because of their need for recapitalisation...

we don't want anything from the German banks, but that the EZ institutions play their role, hence the ECB as a EZ central bank , not as the Germany's poodle, ...etc... etc...

Dr Merkel in the aleatory falling of the dusts LMAO

Merkel doesn't want that we scrutinise the german banks before she get elected, otherwise the German people might get some big surprises, and finito the beans fest for Merkel !!!

Prof. Martin Feldstein is Jewish, yes, but why does this make him an "AIPAC racist Jew"? He has no history of supporting AIPAC; Feldstein is not even a member of any political Jewish organization that I would know of. Most Jewish Americans aren't 'racist' against anyone.

Feldstein is foremost an 'American economist', and surely not 'anti' another peoples or country (at least as far as I know). In 2005, Prof. Martin Feldstein was widely considered a leading candidate to succeed chairman Alan Greenspan as Chairman of the Federal Reserve Board.

What we know is that Prof. Feldstein is a leading American economist and happened, as the chief economic advisor to President Ronald Reagan at the time (where, btw, his deficit hawk views clashed with Reagan administration economic policies), to be a politically active contemporary witness of the period in question here. It will be hard to find a more valuable and neutral historical witness of that time period.

As a member of the Washington-based financial advisory body the Group of Thirty since 2003, it is one of Feldstein's main subjects to analyze the economic consequences of political decisions. This is also Prof. Feldstein's main field of research at Harvard. A man of more integrity and reliability can hardly be found.

All this makes him much more reliable than any French or German source on this matter.

MC: ". . . if Germany want a fiscal EZ federation, she'll have to show her accounts, for transparency, that she forces on the other, while arrogating herself the right to cheat !"

Germany doesn't WANT a "fiscal EZ federation", the French want a lopsided fiscal mutualization with Germany, without giving up one iota of their national sovereignty. This is not possible in the eyes of the Germans.

The French and Italians, those who want that Germany guarantees their debts, are now distracting from the fact that they are the ones that initiated this cross-border 'nonsense' in the first place. We know quite well why this Mediterranean alliance against the German taxpayers' interests was (again) formed in the first place:

Of the $867.3 billion (626 billion euros) owed by Italy to banks across 24 countries, just under half -- $392.6 billion -- is owed to French banks. Of this sum, $97.6 billion were loans to the Italian public sector, $41.8 billion to banks directly, and $253.2 billion to Italy's non-bank sector, mostly via Italian banks.

The exposure of French banks to Italy is therefore substantially higher than the $140.6 billion they lent to Spain and $56.7 billion to Greece. This is the true reason for the French-Italian alliance against German interests.

Germany says: "No agreement on the so-called banking union will be finalized, before the risk for the German taxpayer isn't made clear".

To build an effective universal EZ bank supervision will take years. From the moment of start scrutinizing and then efficiently supervising all EZ banks can hardly be achieved in less than 4 to 5 years, according to Bundesbank experts.

Since Germany insists on knowing the full risk BEFORE it signs up with an EZ banking union, it will take at least 4 to 5 years before the Germans could be ready to sign up for it.

This is "too long" the French and Italians say. "Well", say the Germans, "then lets skip at first all small banks whose balance sheets aren't really a threat to the EZ banking system; these banks", says Germany "can still be supervised on national level at national risk". This makes sense, doesn't it?

A necessary legislative framework alone can't be in place before January 1 next year, with the body starting work later in 2013.

The current deal appears to be a compromise between France and Germany, who disagreed over the timing and over the number of banks the ECB would oversee. However, the work for this legislative framework hasn't even started yet. This will push the date when it this framework is in place still further, all the way into late 2013 or into 2014.

The European Central Bank-led mechanism is supposed to have the power to intervene in any bank within the eurozone. Therefore, from the time it is in place, it would still take up to 2 years to scrutinize the remaining bigger banks. "Too long" says France.

Well, the Germans say, then let the national banking oversight do a pre-selection. Only banks reported by national supervising authorities will take part in the joint liability scheme. These banks, then, can, as a start, be scrutinized and supervised by the ECB; others who want to participate can follow step by step.

No, says France and Italy, "we want all banks to participate, especially the German Landesbanken" . . . even though they are taxpayer-owned anyway and thus their liabilities are already guaranteed by the German taxpayer by law.

Again, as with the implementation of the Euro-treaty in 1989/1990, France and Italy try to arm-twist Germany to sign up for something in haste - before effective checks and balances can be established. Germany would be stupid to agree, again, to such blackmail.

Don't change the subject. You said Germay was turning "nationalistic", and I told you why I don't think there's a shred of evidence that's the case.

Now to the points you mention:

1) Portuguese wages are still about 30% above Czech and 40% above Polish wages. But the gap will close within the next 5 yrs., whatever happens. It should close faster if Portugal wants to avoid losing further jobs.

2) Wage increase 1999-2008 (from the top of my head, and approximately):

Greece: 75 %
Spain: 50 %
Italy: 25 %
Portugal: 25 %

by comparison:
Germany: 5 %

If accounting for tax increases and rising prices, I don't doubt that the available income rose only in Greece and Spain, and stalled in Italy and Portugal. It fell by easily 20 % (by comparison to 1999 levels) in Germany during that period. Ask Big P(umpernickel).

You overestimate Italian wages. Our wages are only about 20% higher than those of Poland and the Czech Republic - with food, lodging, petrol and tax costs that are much higher. Remember, I have travelled extensively in Poland and the Czech Republic over the last 4 years. They are living better than we do.

France and Italy are large net contributors in Europe, both to the budget in Brussels and the bailout funds. Neither of us needs German money or guarantees. Italy needs stability in Euro-markets and Euro-bonds - while Germany seems to delight in profiting from the misery of others, such as Greece.

A Franco-Italian alliance is absolutely logical for almost EVERY reason: except for historical vicissitudes (particularly WWII) and the tendency of Cousins to bicker more than non-family. (BTW, nobody in Italy doubts the French are our cousins).

Otherwise there are just so many reasons... have you ever noticed the similarity of the French and Italian flags? Ours was copied from France's - and we also call it the "Tricolore".
Our first King, Victor Emmanuel, spoke French and Piedmontese dialect - he never did learn Italian.
Our national hero and liberator, Giuseppe Garibaldi, was born and died a French citizen. That was how he was able to be elected to the French Parliament in 1870.

Germany worships at the altar of Exports; France understands the exigencies of Politics and Diplomacy - there is a reason why French was the language of Diplomacy for 300-400 years. (Italy goes back and forth on the issue - since our Diplomacy has been dominated by the Vatican and the US since our defeat). But when France and Italy look at the Greek situation, we too swear silently against Levantine corruption there, but we do not underestimate the political, diplomatic and religious consequences of Greek economic collapse.

In 1991, in the wake of the end of the Cold War. Defence officials in Paris suggested that a French nuclear fleet could replace the American fleet in Naples in the future. We did not react well to the proposal - it was premature. We thought "Why can't we aspire to dominating our own sea in the future (without threatening anybody else)." Today, the time is ripe for such a proposal: we now have strong non-nuclear naval assets, but we cannot have nuclear ships - and the Americans are leaving/have already left. So a unified French and Italian military would only be an intelligent move: France has not only the nuclear deterrent, but the credible and activist political leadership we certainly do not, as seen in Libya, but we now have air and sea assets to pull our weight in any conflict - as also demonstrated in Libya (2000 Italian sorties out of 15,000 total allied over Libya). And in the meantime Italian ground forces can handle UN peace-keeping missions on any continent - we now have more experience than any other nation in such deployments. (While it is not a good idea for France, a nuclear world power, to risk its soldiers and prestige being held hostage to UN rules and mandates - as seen in Lebanon in the recent past. Italy has no such "prestige" to worry about.)

We both believe in mental flexibility - as opposed to rigid, stupid Teutonic mental inflexibility. Of course we are both against inflation - but it requires Teutonic stupidity to fear hyperinflation in the midst of a Depression and liquidity crisis, with inflation at 2%.

France and Italy also share what may be called the "Cult of the State". It may be interesting to pretend under laissez-faire Capitalism that the State is "powerless", but we both understand the State is never powerless. The State, after all, can declare war when necessary and call off our children to fight and die for it: what other power is so great as the ability and right to rob one's children? Do you think it means anything for the State to take over my bank savings, if it is necessary to avoid its bankruptcy? Italian Prime Minister Giuliano Amato taxed our bank accounts 0.6% overnight in 1992. The State just withdrew the money automatically from my bank account: legalised theft. (Nobody in Italy forgets that week, btw. His government decided on 11 July to withdraw the money from the balance of our bank accounts as of 9 July.)
That is part of the reason why I have argued for so long (especially against Josh) that Italy will never default: you foreigners are blissfully unaware of what our State is capable of doing, in order to survive.

With that type of philosophy, neither of us think there is any use to speak of "assisting Greece after they leave the Euro." There is no assisting a failed State. So, we are driven to really despise what are very obviously German lies. Germany refuses to help us make a contribution aimed at avoiding Greek default - but says they will be more than ready to make contributions if Greece leaves the Euro??

But, do you really think it is just a coincidence that France has invested over €400 billion in Italy? Investments that have increased over the last two years in the private sector (and decreased slightly to the public sector as our bonds have been donwgraded)...?

I have not heard any complaints here about French companies buying up ours. The fact is that France DOES have a large and growing Mittelstand - much of it is in Italy.

And another point: France cares about and moves when necessary in the Mediterranean. The fact that our government of "technicians" either refuses or is unable to cut the golden pensions to balance our budget - and spends €1.4 billion annually in Afghanistan, where we have no interests and no historical presence - while we are "unable for budgetary and political reasons" to move in Syria, is infuriating. The capital of our State is Rome - the Eternal City. Nobody in the Eternal City doubts the importance or the relevance of events in the Holy Land to Italy.
Monti's government is showing the same reluctance to intervene as we did in Libya. And this is shameful - even though I believe we did the right thing in the end in North Africa. Italian Foreign Minister Terzi told his Turkish counterpart last week in Rome that Italy would not move in Syria without UN approval - which he doubted would be forthcoming due to Chinese and Russian opposition.
Apparently, we require French leadership to move militarily.

... with how poorly ITALY has fared even though it was spared anything akin to the costs of German unification (about 2 trillion euro), I know which nation has been "mentally flexible" over the past 20+ yrs, and which hasn't. I'm not sure you've noticed, yet, but "Italian politics" has become synonymous with "sclerotic" in international parlance.

The danger of wrapping oneself too tightly into a cocoon of prejudices is that one fails understand reality, Joe.

"Monti's government is showing the same reluctance to intervene as we did in Libya."

_________________________________

Of course. Money's tight. And Italians have never had a reputation for rushing to the front. (Not always a mistake.)

You know who's ready to go? Correct - the Germans.

Remember how you kept telling us for weeks that the Germans wouldn't participate on the Syrian front, while Italy certainly would? Now, guess what – all German lead media outlets reported over the weekend that the German Minister of Defence has gotten the first anti-aircraft units (PATRIOTs etc.) battle-ready and is only waiting for an official Turkish request to send them to the Turkish-Syrian border, with more to follow upon request. All of this bilaterally, and without NATO calling for it.

And here's something else you don't know, apparently: The German navy - and not the Italian navy - is permanently patrolling off the coast of Lebanon.

Quite new to me that there should exist a Germanic part in France?
Where should this part be?
Alsations and Lorraines are defintively no Germans at all.
They just were forced against their will to be Germans during the German occupation.
But they are nothing but French and as less Germanic as the people from Naples or Madrid.
I never met anybody in Alsatia or Lorraine who spoke German except some very old people who spoke a very horrible and not understandable dialect like meteques or le petit negre.
And nowhere in France you will find anybody who only speaks a single German word.
And the admiration of Germany by the French is rather limited or better said not existing.
Just take notice of the opinion of Marie Clear who is more than representative for her country and nation.:)
At every corner in France you will find people with the very same opinion.

It was recently revealed here that there were 40 Italian commandos on the ground in Libya during the war - helping out the rebels.

What makes you think you know what we are doing?

The German navy? You mean that coastal defence force with four submarines and a dozen frigates? Not a warship over 6,000 tonnes? Have you actually taken a look at what Italy is floating these days?
http://en.wikipedia.org/wiki/Italian_aircraft_carrier_Cavour_(550)

Whenever proved wrong, you are changing the subject: We were talking about Syria, not Libya, and I have just given you two examples why you were wrong to suspect that "the Germans" would never show up there.

"Spiegel" has it that a Bundestag majority for an engagement at the Turkish-Syrian border is certain.

Honestly, I would welcome being wrong on that count - and I will believe it when I see it.

It would be even more impressive if ships were sent there under a European flag - and coordinated by someone in Brussels or Strasbourg.
How about this: giving any sort of nominal military command to the Commission may smack of granting more prestige to a limited number of individuals than anyone in Europe cares to approve - but not a TERRIBLE symbolic precedent would be putting a small fleet under the nominal control of the European Parliament - and, what a nice coincidence, there is a German President of the Parliament at the moment (which is more of a command position than anybody in Europe would otherwise be willing to grant a German these days).
Schulz's hand would be strengthened PRECISELY by the fact that Germany has no real navy to threaten anybody and would only be contributing a ship or two.
Throw together a battle group of a couple of ships apiece from Germany, Italy, France, the Netherlands, Spain, Poland and the UK (Aircraft carriers are not really needed, since the EU's Cyprus is right there. Given that they need a rescue package from Brussels...)

Then we vote to fund the FUEL expense (only) for those ships out of leftover, unspent monies from the Brussels budget - keeping the Parliament involved. And voilà! With a number of extremely modest moves a decent-sized fleet will lay off the shores of Syria to show the European flag and give us a say in the crisis and the form of its resolution.
In case of serious attack, the bigger EU countries can have several dozen Euro-fighters and attack helicopters flying over the fleet or Syria from bases in Cyprus in a matter of hours.
In the meantime, the EU would take advantage of the banking crisis in Cyprus and their request for aid to sign a deal to rent and air-and-naval base there for a permanent (but small) EU military force in close proximity to the Holy Land in exchange for an annual rent.

As for the ships to anchor there, Italy and France are building a new generation of frigates - the FREMM class: displacing only 6,000 tonnes, they are some of the most expensive, modern and heavily armed destroyers that have ever been built (€800 million apiece) - being more than sufficient to show the flag and yet still have considerable firepower available with relatively cheap out-of-port operating costs:http://en.wikipedia.org/wiki/FREMM_multipurpose_frigate

2) When going on and on about how the Germans must be kept from the steering wheels of Europe, may I remind you that the ESM's president is a German, Mr Regling? Arguably one of the key positions to be held in the EU these days.

3) I believe you that the Italian navy sports owns some fine ships and I know it has been bigger than the German navy ever since WWII (which is really more of a muscled coast guard), but fail to see the relevance in the context of Germany's surveillance activities off the Levantine coast.

4) I always thought it was ludicrous to call the euro a matter of war or peace (which is it not), yet never really become serious about uniting the EU's armies. So there's a bit we might agree on for a change.

Obviously, the French social model is a problem for English liberals. But first look at what happens in the UK - is England's economy doing better than France's despite all the tax cuts on businesses (phone companies to start with) ? Unemployment in the UK is lower because ordinary people are simply struck off the lists. As for pensions, ordinary people receive a pittance. So enough of it! The Economist should first consider what goes on in its own country.

TE's correspondents in France (who have positively basked in the media's sunlights ever since this article) have clarified the issue of TE's citizenship: "The Economist is an European newspaper".

Knowing TE's deep mistrust of anything Euro, that's a howler...

That being said, the issue of why France is singled out, on a weekly basis, for a public trashing by the Oxbridge prefects is not a moot one. Neither its performance nor its fundamentals, although far from sterling, warrant such negative discrimination among other European countries.

It is therefore perfectly relevant to ask TE to consider the UK's situation, but in the light of a simple question: how did the faithful implementation of the ultraliberal doxa help the Kingdom's humble subjects, as opposed to Their Highnesses in Cabinet?

I can see not any mistrust of the TE towards France.
Each time if somebody is writing or saying anything about France they are reacting more than an oversensitive plant. or better like a little child.
TE has been regarding the French situation more than serious and without any prejudice.
So I say thank you to the TE for this open kind of opinion:)
I have nothing to add to the reasonable statement of the TE.:)

As to be expected the French flag waving "denialists" will always revert to comparisons when the subject is France. This is not surprising as their denial of reality runs so deep that the only possible riposte is either one of denial or a histrionic run to comparison. So bring it on! There are lots of countries that are in big trouble. I believe The Economist has highlighted them in the past. This article was about France. Are you offended? So what. My heart bleeds for you. NOT! Your newspapers are saying the same things, your media is saying the same thing. You had a Prime Minister, Fillion, who told the nation that the country was broke. Is the nation ready to make sacrifices? I'm not so sure. Read the Deni Français for some verifiable facts about France and it's extravagant spending on credit (chiffres à la appui). But no. Like schoolchildren the "denialists" don't want to hear it. Like those who drive away with parking tickets still stuck under their windshield wiper, they hope it will just blow away so they can say they never received it. They cringe when they receive a "lettre recommandée" They hide behind their Maginot Line after not having learned the lessons of the past. Nobody wants to see France go down, but if you are satisfied with mediocrity have at it and continue like you are doing and continue digging yourself into a hole. Because you ain't foolin no one but yourselves. You will deserve the outcome you get.

Preaching in the desert ? The editorialist is another of those Cassandras predicting doom if one does not repent and amend one's ways. I have been an attentive reader of the Economist for, well, for a long time and one wonders whether your Cassandra has been heard in his/her own country. Britain a haven of peace and happiness, success and wealth for all? Not yet, but surely in a near future. One just has to go into the small lanes of North Staffordshire to see that The Gospel of Wealth succeeds. Or not quite so...
For interested readers : an article in the Observer this week about Britain out of the EU. Another friendly Cassandra ? Indeed quite a family...

For those of you who read French. Of course they are less inclined to make an effort to reduce the budget deficit. If it wasn't reduced in one month following the announcement of the seriousness of the situation then the French are already tired. It is not only for the economy but everything that requires a minimum of self discipline. the French are always "tout feu toute flame" initially but when it takes some real long term effort then their resolve begin to disintegrate like ice in the desert.

British Victorian system collapsed because of its arrogance. France monarchy system collapsed because of its arrogance.
Something is telling me that the system much vanted by the economist WILL collapse.
Happy it's not the French one.

Again, you don't consider things you might not see or understand and it is slightly arrogant.
In social democracy, investments are going into education and health instead going into consumption.
Sorry but a healthy and educated society with efficient facilities are less likely to collapse.

To my French compatriots having posted all these brilliant comments:
- you are doing a big appreciation mistake by viewing TE as a British newspaper. TE takes a fact-based approach when challenging each country or economy, including Britain. Look at TE's articles about Britain. Certainly imperfect, it is one of the very few world newspapers giving to our small country a sense of how it is perceived by the big outside. We are even fortunate to see detailed analysis about us in today's world potentially dominated by China, India, USA and Brazil. All four being continent-size countries.
- you should welcome these wake-up calls; by pressing where it hurts maybe they help our leaders avoid big mistakes and remember we live in a world where governments are in competition against one another for attractivness; businesses and now generation Y prove everyday they can exercise their free choice to pick the best fit place for what they want to achieve; the poor performers (governements I mean) will see their country assets acquired one by one by the best perfromers at a price they can no longer afford; sovereign debt is one of the most powerful levers in today's geopolitics
- by taking such a defensive stance you just give more credit to the point here made on France; Minister Montebourg is just ridiculising himself and the French People when he calls TE the CharlieHebdo of the City (it looks as if he couldn't read English)
- time has come to behave as big boys and stop these kindengarden behaviors (Britain against France, France versus Germany, southern countries against northern Europe, ...); either we join forces in this continent to exist in the new world or we proceed to lose and manage an end of civilisation...

Montebourg has been a laughing stock of the medias and of his "elephants roses" collegues in the socialist party, but his operation was a succes, the switter of "Armor" label made a jackpot with sales, 75% of the French in a poll said that they are redy to pay 10% to 15% more for buying Christmas gifs "made in France"... that looks silly, but not if you can transform consumerism.
I for one bought "made in France" for my grand children, and didn't fount the price excessive
I'm rejecting "made in Germany", even pics of it!

My tone was actually a bit sarcastic and I was also playing/acting as living french stereotype who still prefers giving than receiving lessons.

And despite I think the "CharlieHebdo of the City" joke is quite funny, I do indeed disagree with that... You should have seen when France was Downgraded by Standard&Poor the feedback of our politics was to criticize S&P without questioning themselves at all.

French and English have also definitely different approaches regarding economy... but I am afraid indeed that our french politicians are in a complete denial about what's happening...

You are exactly right! Stop the kindergarden behaviour!! The real problem in the West (Europe and the US) is that all these societies are overaged, overregulated and oversaturated. In Europe the problem
is to drill down into the issue what "Europe" is and re-invent the
the "European Myth" beyond the sphere of economy, as the US is trying to define the "American Myth" in a globalized world. And these myths do not only relate to economy, there is much more to it - philosophy, the history of ideas, human rights etc etc etc - everything that is specific "European".

But you're using the same language as the Nazis did against Jewish businesses, that makes you, at least, a like-minded person with a similar mind set as the former.
It doesn't matter which race someone is discriminating against; what counts here is that he/she uses a blanket discrimination against a whole people . . . not verifiable facts against guilty individuals or governments.

You know what : you spent soooo much time in the UK that you NOW start talking like a Brit, a very liberal Brit !!
How much did you make last year?
Yeahhh, I guess you are this type of French guy that rules Europe through international Finance, whose advice is NOT balanced, whose tone in NOT appropriate in this kind of situation.
Please remove you mask :)

Please while in France have a look on two simple things:
- on the streets : Germans car brands are the ONLY ones that actually went through crisis and developed their mkt shares. French brands are still very popular but not admired. Germany represents a country able to produce good, reliable, respected products. And, of course, not only in the car industry ...
- at home : have a look on Opel TV ads. The conclusion is in German, written & spoken.
Do you really believe car makers would take the risk of developping in France if they ever thought the French do not like the Germans?

Because you are too "silly" to understand how France's growing current account deficit is settled within the Eurozone.

It's done through the 'perfidious' European Central Bank’s inter-banking payments settlement system for all cross-border trade within the Eurozone, called TARGET2.

Every time money flows from the banks of one euro member country to the banks of another, it does so through the Target system (unless, of course, the money flows across the border as cash in a suitcase). It’s, at least in theory, simple enough:

Let’s assume the French toy store where you buy your grandchildren’s Christmas presents orders fifty model trains of the German world leader in model railroading (Märklin). The German exporter will deliver the model trains, whereupon the French importer will advise his bank to transfer the agreed purchase price. The French bank will effect the transfer through Banque de France, which will credit, i.e. enter a liability on its accounts, in favor of the German Bundesbank, which will then credit the sum to the bank of the German exporter, in this case Märklin.

The French toy store gets its Märklin model trains, the German exporter receives his money. However, the money never leaves France and it never enters Germany. Instead, the Bundesbank receives a "TARGET2 claim" against the Banque de France, to be finally settled against similar purchases by German businesses through French exporters.

But – and this is the astonishing twist of the story – if the balance of payment between France and Germany continues to be negative for France, or even deepens, then the liability of the Banque de France towards the Bundesbank will NEVER be settled.

I realize this. Also here in the US the label "made in Germany" is like a seal of quality. If a company wants to establish a new product in the upper market segment, it usually runs comparative ads against a similar German product, saying "we are as excellent . . . but x dollars cheaper", thus boosting the image of the German product even more. German export success partly lives from this image.

Mon cher compatriote, I would agree with you, just to make you feel better, but then we would both be wrong...
I think the "appreciation mistake" part is a tad naive. When you love the U.K and british culture (as most French and Europeans do), it is actually very healthy to dislike The Economist. Thank God, this bunch of spoiled pampered little brats do not represent England (or Britain, for that matter). Most of their articles are nothing but a load of neoliberal thought-terminating clichés. And as far as european integration is concerned, they neither help nor even bother to think about it in a constructive manner. I guess studying Europe (or France) as an abstraction from an ivory tower is probably not the best way to go. But, eh, critical/original thinking is all the tougher when you're constantly acting like America's lapdog... No need to panic, though: the british people=much wiser than TE and its ilk... Chers amis britanniques, on vous aime, contrairement à The Economist, cette bande de sales gamins mal élévés, déracinés et complètement déconnectés des réalités économiques européennes.

Germany never had fans in Western Europe (Just watch your medias) and so Germany can not lose any fans in Europe:)
Germany has its fans in Russia and China and in the Northern part of Europe.
So Germans do not bother if they have fans like you in France or not.
Nobody in Germany is even interested what is going on in France because it is a foreign country for us.
So do not always overestimate your importance.
Nobody anybody in the world is taking you for serious.
You have to learn that France is no longer an important factor in Europe and in the world but only a debtor like Greece or Cyprus that needs money.
The real games are made meanwhile elsewhere but not in Paris.

It is about EUROPE, Stupid! EUROPE also is Plato and Aristotle,
Dante and da Vinci, Pascal, Montaigne, Camus and Sartre, Goethe, Hegel and Kant, Blake and Shakespeare, Ortega y Gasset, Weimar, Oxford and Cambridge etc etc etc etc. Think about a new European Myth!

Stop the chauvinistic and racist comments! Old thought patterns that do not add any value to the actual situation. Study the Elder Statesmen of Europe or the philosophers. Create new ideas instead of having every nation scapegoating and blaming the other! Got me?

Alas, yours is a minority position. Demagogues everywhere are fostering hatred against Europe and other European countries, to ensure a few measly ministerial appointments. The positive view still held by a majority about the EU is based on bean counter reflexes. The great victory of the Brits has been to persuade everybody that Europe is about market shares, single market and Polish plumbers. Elevating the debate won't be easy.

Europe is just not Dante, Pascal or any other French or Italian artist or philosopher.
And Goethe as well as Kant and all other German artists or scientists have been regarded since ever as a part of an inferior and very low culture which is based on an inferior language.
So German artists, scientists and philosopher only belong to Germany and to nobody else because they are German property and fortunately nobody in the rest of Europe is able to read or understand them because no European speaks the language:)

The reality of Europe and the most important expression of European opinion that is what we see daily in the newspapers about Greece/ Spain/ Portugal and France.
Riots against Germany , huge manifestations daily in France against anything that only looks German, boycot of German products in Greece/Spain/Portugal and France.
This is the opinion of the whole rest of Europe about Germany.
Huge public and official anti-German campaigns in France against Germany in all their medias.
The rest of Europe has started an economic war against Germany because they can not afford any more a real hot war.
The ever existing rifts and deep contrasts between the European nations now come true.
Tell me a single Frenchman or Italian who ever would read Goethe or Kant:)
Most Frenchmen or Italians do not even know where Germany is situated and in Spain and Portugal
it is worse.
So this is YOUR new Europe where elder statesmen are trying to wipe out Germany after they failed twice last century.

pff, I use a strategy to counter Germany/German posters, that have interests to trash France, because she doesn't comply to the Berlin dictats, that would want to see us as only a reserve for buying german goods, while Germany doesn't make a effort to support her EZ neighbours in buying their goods, she prefers to buy asaiatic, and eastern Europe, much cheaper products than from EZ, so, it's why, we have no interest to support Germany in our club anymore. The only policy that will make Germany a bit more accommodative, is to reduct her marge from Western Europe

oh, and you have no lesson to give usfor discrimminating, you gave us a large pannel of your Übermenscheit

You might not be at home in this area. For example, Hölderlin, Nietzsche, and Martin Heidegger were and are read in France, Ernst Jünger is even published in the "Bibliotheque de la Pleiade", Voltaire, Lacan, Virilio, Foucault were and are read in Germany. Naturally, not on the level of the masses.

In MY new Europe, besides the difference in life styles, I concentrate on the commonalities. There is no place for racist and chauvinistic scapegoating if Europe wants to meet the challenges of a globalized world. And, by the way, I am German.

Yep, in France we get a little more holiday, a little more health care, a little better social housing, a little more legal protection against sacking, considerably less pensioner poverty, etc etc . All of these are excellent things. I recommend combative trade unions as the best way forward in other countries too.

The advantages you mention are presently largely paid for by ever increasing levels of debt and/or French business becoming less and less competitive as lower margins decrease ability to invest in the future etc. As for combative trade unions, could you kindly tell us how many jobs the CGT or Sud have ever created or even preserved?
I see a lot wrong with the sort of financial capitalism that has come to dominate the scene over the last 20-30 years but I also see a lot wrong with organisations like the above mentioned unions whose only purpose in life seems to be the preservation of the statu quo, no matter how much change is taking place around them.

Ah fate? There was me thinking it was rich people wanting a higher return on their "investments". If it's fate, in fact, divinely ordained etc, well I apologize and I will promptly give up opposing capitalism.
In Britain in 1945, Churchill claimed that the only way forward was to avoid spending money on public services. But most people said "that's not fate: we want a free health service and stuff". And they got it. Todaythere is far more wealtha round than there wa sthen!

Would you think that the Germany's handling the euro-crisis policy isn't for preserving german rentiers? She only can hope as a aging country that the workers of the peripherical countries will pay for german elders care